Lili raises $15m in Series A round
Lili has raised $15m in a Series A funding round to support its all-in-one banking app aimed at America’s growing freelance workforce.
The funding, which follows a $10m seed in June, was led by Group 11, with participation from Foundation Capital, AltaIR Capital, Primary Venture Partners, Torch Capital, and Zeev Ventures.
Capital will be used to accelerate the growth of the platform to meet increasing demand. Lili says transaction volume has increased 700% since the beginning of the COVID-19 outbreak, with nearly 100,000 self-employed professionals now using the app to manage their finances.
Founded in 2019 by Lilac Bar David and Liran Zelkha, the entrepreneurs behind Israeli challenger bank Pepper, Lili provides freelancers with the tools to centralise their day-to-day spending, track expenses, handle taxes and glean insights to gain a clearer picture of their overall finances. Account holders are issued a debit card on VISA’s network.
America’s freelance economy boom
Around 60 million workers in the US are freelance, a figure which looks set to rapidly multiply. Since the COVID-19 outbreak, 12% of the nation’s workforce has turned to freelancing, according to recent findings, leading to an overall 2% increase in self-employed professionals. More than half of those who have gone solo say the move was out of necessity, while three quarters believe they will be more financially stable as the pandemic rages on.
Lili co-founder and CEO Lilac Bar David expects this trend to continue and believes “the future of work is freelance”.
“We’ve seen exponential growth in demand over the past several months, as more people are looking for all-in-one financial solutions that are tailored to the unique ways they work,” he adds. “We are looking forward to expanding our product suite and market leadership while providing freelancers with an unparalleled banking experience.”
Fundera named Lili the Best Bank Account for Freelancers 2020 in May, praising the app for its accommodation of first-time freelancers and those starting out as self-employed.
Zafin: Banking is now in the era of the tech ecosystem
The development of tech ecosystems is placing the future of post-COVID banking in jeopardy. At a time when Big Tech can replicate the functions of traditional financial institutions, what can banks do to retain a grip on the market?
John Smith, EVP Ecosystem at Zafin, has a few ideas. A SaaS cloud-native product and pricing platform for financial institutions, Zafin is preparing the next generation of banks to cope with this precise challenge.
Smith is responsible for the strategic and tactical management of the company’s ecosystem, including the creation of new business models to support growth and differentiation. We asked him four questions:
Q. Have the events of the pandemic caused an irreversible shift in the digitalisation of banks? If so, is COVID the sole cause or are there other factors?
It’s a great question and one that I am asked a lot. Without a doubt, the COVID-19 pandemic has driven a significant shift in the acceleration of digital. In fact, I’ve seen some estimates show there to have been as much as four to six years of digital adoption growth since the initial lockdown started.
While the pandemic may be the primary reason for this growth, two other drivers include fintech disruption and the high costs of operating a traditional retail bank. Both of these factors have caught the attention of banking executives as they set their minds on accelerating digital transformation with a focus on high return, low risk.
Q. Some commentators believe banks must learn from Big Tech in order to survive. Do you agree? Please expand.
I agree completely; we’re living in the era of the ‘ecosystem’. All the seismic shifts we’re seeing in technology, be it aggregation, embedded finance, DeFi or hyper-personalisation are all enabled by the foundation of an ecosystem.
When financial institutions work with a strategic partner like Zafin, which has made the strategic investments in a best-in-class ecosystem, they’re able to capitalise on opportunities more quickly and safely, and will be better positioned for growth now and at the other side of the pandemic.
Q. What are currently the obstacles to adopting Open Banking? Is it more likely to 'take off' in some regions rather than others?
I would argue that Open Banking has been in the US for some time and will only continue to grow there. By definition, Open Banking is about the secure sharing of financial information that customers are aware of and have authorised. Under that definition, we’re seeing aspects of this well underway even though its full potential remains to be seen.
Third-Party Providers are a natural outcome of Open Banking, whereby they can create propositions beyond what a bank normally does to enable banking functions such as payments, borrowing, saving and so on. Once again, some of these are already present through industry-led initiatives, whereas regions such as the EU have taken the pathway of regulation such as PSD2.
The industry-led initiatives we’ve seen in the US have also had the added advantage of guard-rails that regulatory bodies like FFIEC and CFPB provide. There are also other technology-led initiatives such as API definitions that are set out through the FS-ISAC.
I would argue the future of Open Banking in North America will be through the natural evolution of the guidelines and API definitions that have been published, as well as the natural progression of industry initiatives.
Q. Are there any other bank tech trends you'd like to discuss?
Coreless banking. Zafin has been pioneering some of the work around externalising functions out of the legacy core to drive a more ‘fintech nimble’ bank, while not having to deliver a ‘heart and lungs’ core bank replacement.
Real life examples of this include moving some of the core functions of a banking system, such as product and pricing to a platform like Zafin. Origination, onboarding, KYC, risk, and compliance are all other examples of externalising banking functions for added agility.